Affordable Housing takes a Hit (to the benefit Strata Land)

Housing affordability is one of the most challenging issues facing those in charge of property development in Australia (and many other places).

And, housing affordability has taken a hit recently.

The housing affordability index dropped to the lowest level in 20 months during the June quarter as interest rate rises and price increases put real estate out of reach of first home buyers and the Housing Industry Association-Commonwealth Bank housing affordability index dropped 9.1 per cent to 108.3 in the June quarter from 118.8 in the March quarter.  This is the lowest its been since September 2008.

The affordability index factors in interest rates (which moved up twice in the June quarter to 4.5 per cent) along with household incomes and house prices.

Comparing the cities and states –

• Sydney affordability dropped by 9.1 per cent
• Victorian affordability dropped by 6.7 per cent
• Queensland affordability dropped by 7.4 per cent
• South Australian affordability dropped by 8.7 per cent
• Western Australian affordability dropped by 2.1 per cent
• Hobart affordability dropped by 2.4 per cent
• Canberra affordability rose by 6.6 per cent (as home prices fell 8.9 per cent)

Interestingly average monthly mortgage repayments in Sydney are $3430, and $3291 in Melbourne … that’s a lot of money compared to what we were all paying 18 months ago.

Anyway, despite the bad news about reduced housing affordability there is some good news for strata.

More expensive housing means that demand shifts to cheaper housing and cheaper housing is going to be strata title … leading to increased demand and  supply of strata apartments … resulting in more strata schemes, more lots, more owners, more managers, more suppliers and more high density rea estate business and social interactions.

See you in more affordable strata housing soon.

Francesco …